Barry Nalebuff is an entrepreneur who has recently launched a bottled organic tea brand calledHonest Tea (which can be bought online) He has decided to bid on the Google keyword, Healthy Beverage, and would like to know how much to bid on this keyword For this purpose, he decides to use the PROSAD decision support system Barry learns from Google that 25,000 daily searches happen, on average, on the Google keyword, Healthy Beverage Suppose that among the people who both search on the keyword Healthy Beverage on a given day and also then click on Barrys sponsored ad, 0 5 are successfully acquired (i e , become customers ofHonest Tea) Suppose further that the annual profit contribution to Barry per acquired customer is $500 a Barry Nalebuff wants to invest in tracking online clickstream data using Google Analytics and, therefore, understanding the impact of various ranks on clicks Right now, before having gathered such online data, what would be a conservative bid for Barry Nalebuff to make for the Google keyword, Healthy Beverage Explain your answer Over the first quarter of launch, Barry subjectively revises his bids on the Google keyword, Healthy Beverage on a daily basis As his bids change, his sponsored ads rank changes and, therefore, the clicks on his sponsored ad change as well Based on the data collected during the first quarter (using Google Analytics software), Barry estimates the relationship between clickthrough rate (CTR) and sponsored ad rank, and it is as follows ln (CTR) 1 8819 0 5265 RANK Barry also estimates the relationship between costperclick (CPC) and sponsored ad rank, and it is as follows ln (CPC) 0 9009 0 0638 RANK Which increases at a faster rate going from an inferior rank (say, X 1) to a superior rank (say, X) clickthroughrate or costperclick Does this imply that Barrys optimal bid for the keyword Healthy Beverage would be higher than, or lower than the conservative bid, calculated in question 3 (a) Why Suppose Barry Nalebuff bids the optimal bid for the Google keyword, Healthy Beverage as recommended by the PROSAD decision support system What rank would he obtain for such a bid What would be the transactional profit that Barry Nalebuff obtains from the above bid

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Barry Nalebuff is an entrepreneur who has recently launched a bottled organic tea brand calledHonest Tea (which can be bought online). He has decided to

Barry Nalebuff is an entrepreneur who has recently launched a bottled organic tea brand calledHonest Tea (which can be bought online). He has decided to bid on the Google keyword, Healthy Beverage, and would like to know how much to bid on this keyword. For this purpose, he decides to use the PROSAD decision support system. Barry learns from Google that 25,000 daily searches happen, on average, on the Google keyword, Healthy Beverage. Suppose that among the people who both search on the keyword Healthy Beverage on a given day and also then click on Barrys sponsored ad, 0.5 % are successfully acquired (i.e., become customers ofHonest Tea). Suppose further that the annual profit contribution to Barry per acquired customer is $500.

a. Barry Nalebuff wants to invest in tracking online clickstream data using Google Analytics and, therefore, understanding the impact of various ranks on clicks. Right now, before having gathered such online data, what would be a conservative bid for Barry Nalebuff to make for the Google keyword, Healthy Beverage? Explain your answer.

Over the first quarter of launch, Barry subjectively revises his bids on the Google keyword, Healthy Beverage on a daily basis. As his bids change, his sponsored ads rank changes and, therefore, the clicks on his sponsored ad change as well. Based on the data collected during the first quarter (using Google Analytics software), Barry estimates the relationship between clickthrough rate (CTR) and sponsored ad rank, and it is as follows: ln (CTR) = 1.8819 0.5265 * RANK. Barry also estimates the relationship between costperclick (CPC) and sponsored ad rank, and it is as follows: ln (CPC) = 0.9009 0.0638 * RANK. Which increases at a faster rate going from an inferior rank (say, X+1) to a superior rank (say, X): clickthroughrate or costperclick? Does this imply that Barrys optimal bid for the keyword Healthy Beverage would be higher than, or lower than the conservative bid, calculated in question 3 (a) ? Why?
Suppose Barry Nalebuff bids the optimal bid for the Google keyword, Healthy Beverage as recommended by the PROSAD decision support system. What rank would he obtain for such a bid?
What would be the transactional profit that Barry Nalebuff obtains from the above bid?